FIRE Crossroads 006: Mile High, Mostly FI, Working in Finance and Wine

If you were just a few years from FI and not loving your job, would you leave it? Sure, wine not?

Olaf did just that and now splits his time between two part-time jobs, one of which has him setting up tastings as a wine ambassador. That sounds like a job that someone might hang onto well past the FI inflection point.

A frugal fellow, who is working on loosening the purse strings, would like to know how you find balance between saving for the future while enjoying the present, all while making progress towards financial goals. If you’ve found a formula that works for you, please weigh in down below after reading Olaf’s story.

If you’re interested in participating in one of three interview series, please download the most appropriate form for your life situation: FIRE Starter, FIRE Crossroads, or Post-FI Notes.

 

 

Getting to Know You

 

Where are you on your financial independence journey? Have you crossed the halfway point in terms of net worth and/or passive income?

In my opinion, we are financially independent as we can go decades-plus without a job. However, in terms of traditional FIRE, we crossed the halfway point last year for leanFIRE and this year for fatFIRE.

With our home equity included, our net worth is equal to our FIRE goal. As a result, we are thinking of creative ways to capture the equity in our home and put this non-productive asset to use. As to whether that will come to fruition, only time will tell. Without our home equity, we are anywhere between 5/8 and 7/10 of the way to full FIRE.

 

Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?

I am part of a fantastic two-member household, plus a rambunctious tabby cat,that is beginning its thirties. My better half and I became engaged earlier this year after I popped the question five years in the making.

We are currently enjoying life just outside of the Mile High City on one of the nearby mountains since the open space is calming and allows for hikes and mountain bike rides at a whim’s notice.

As natives, both of our families reside nearby, and fortunately, they are financially independent due to robust savings habits which they instilled into us.

 

In what field are you working? How is your career going? What do you like best and least about your chosen profession?

I work in two fields: finance and wine. I work part-time both as a financial and educational advisor at a small investment advisory firm and as an ambassador for a boutique winery.

I am delighted with my work because I do not work nine to five, and my schedule is mine to make each day. I wake up each morning and pull one to two shots of espresso. Then I either start blogging, working, or hop on my bike since the trails are two minutes from our doorstep. Each day is different, and I love it.

Currently, my career is in an interesting place. Earlier this year, I had worked for one of the largest asset managers in the country, grinding away and climbing the corporate ladder. While I moved up extremely fast, I found myself drained and feeling like an imposter, as working for someone else’s goals instead of mine was wearing.

I began crunching the numbers and realized that I had financial independence, not in the traditional sense of retiring now, but enough to last more than two decades. So, I quit with a sabbatical in mind.

 

Do you feel you’ve come to a crossroads of sorts? If so, tell us about it. What options are you contemplating?

Absolutely! I have struggled with work, saving, frugality, and purpose ever since graduating college. You see, I have obsessive-compulsive tendencies and often dive head over heels into goals, running at 110% until I cannot anymore.

Thus, as discussed above, I quit my previous job when I couldn’t tolerate it. Despite being promoted three times in less than two years, I lacked fulfillment by chasing the corporation’s goals.

Financial advice is challenging on its own, as it requires you to be a therapist – after all, money is emotional, not mathematical. Coupled with the fact that I worked in a phone center, my job felt very anonymous and statistically driven. Take X number of calls and help Y number of people plan for their future, for example.

Earlier this year, the department head changed, and the new leader drove an initiative for higher efficiency while maintaining purposeful client interactions. I do not see these goals running congruently. Instead, I believe they run perpendicularly, intersecting at a certain point but diverging as efficiency is mandated.

So, after raising my concerns directly in a town hall and being dismissed, I began crunching the numbers and reflecting on life. I soon realized the fallacy I had been chasing. I didn’t want FIRE; what I wanted was FI and could care less about RE.

For me, purpose in life is about enjoying what you do and doing it on your terms, without constraints. By following this model, you can impact those around you and improve the world, regardless of whether it is a financially fruitful endeavor – for example, my blog, Mile High Finance Guy.

However, getting to the point where you chase your passions requires saving and a lot of it.

When I first began my FIRE journey six years ago, I cut my expenses down to a very slim operating budget, depriving myself of many things. Despite making $70,000 a year, I gave myself a discretionary budget of $300 a month. Unfortunately, this led to me being cheap.

However, as my income grew from five to six figures and my savings rate eclipsed the 60% mark, I started easing off the extremes of frugality to value spending. I no longer have the stigma of being cheap, and my friends and family respect my spending and saving habits.

Still, getting to the point where I didn’t guilt myself for financial purchases was an arduous journey after going hardcore on the frugality train. But I am a recovering frugality addict. The upside is that I amassed substantial wealth in a brief period, which enabled me to be free and financially independent.

As a result, my definition of FIRE has changed. My partner and I have enough funds to last us twenty-plus years, so I see no reason to overlook chasing our dreams now.

So, after quitting to take a sabbatical, I soon found myself with job offers and accepted one working part-time as an advisor and educator for a small advisory firm. I make about half of what I made before but am still saving half of my income. And the upside is, I never feel like I am working.

 

Investing

 

How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?

• 40% in US Large Cap (of which 70/30 is index/active)
• 20% in US Small Cap Value Indexes
• 20% in US REITs Indexes
• 20% in International Total Market Indexes

 

I allow for a 5% drift in my portfolio but rebalance once this threshold is crossed.

I invest my REITs in my HSA and Roth, my active Large Cap funds in my Roth IRA, and other positions amongst my tax-deferred, after-tax, and Roth accounts. I am a big proponent of tax-efficient investment location-based investing. I.e., holding assets where they make the most sense due to the tax code.

 

Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?

Primarily in taxable, post-tax accounts. However, it is nearing half and half with the gains in my Roth accounts.

 

Do you have investments in an HSA? How about 529 Plans?

I do! I only invest my HSA in REIT indexes, as I find them the most tax-efficient location. Because REITs are not taxed at the corporate level, generate returns that can be non-taxable, and the HSA is triple tax-advantaged, my HSA and investments work in unison to provide growth and optimal tax advantages.

Regarding 529 plans, we started one even though we do not have a child yet. Someday, we plan to change the beneficiary to our child from me since the tax code allows for this. If our child doesn’t go to college, that is fine, as the 529 can be used for primary education expenses along the way.

 

What has been your best investment?

In recent memory, FZAHX. It is an active large-cap growth fund only available in 401(k) plans, and I have a smallholding of it. It contradicts my views on active funds, but I view it as my “fun” money.

However, over the long term, FXAIX/FNILX/VOO have been my best-performing investments and all track the S&P 500. I hold VOO in my taxable accounts due to the tax-efficient nature of ETFs and FNILX in my tax-advantaged accounts. I used to have FXAIX but switched to FNILX due to the zero expense ratio and comparable performance.

 

Your worst investment?

Currently, FREL. REITs were hit hard with the Corona Crash last year and have been slower to recover. Still, historically they lead to lower portfolio volatility and more significant returns over the long term, so I am holding them with no end in sight.

 

 

Into the FIRE

 

Numerically, what is your FI goal?

Around $1.4 million.

 

When do you suspect you will achieve financial independence? Will you retire from your career once you’re comfortably FI?

As I noted earlier, I believe we have reached FI, just not RE. To achieve full FIRE, I think that we are another five years out since I sliced my income in half. We could have reached it sooner, but the stress of working my previous job was not worth it, so our savings ability has reduced. Still, this came with a substantial increase in the quality of life, so it was worth it.

I remain skeptical that I will stop working entirely, as I love teaching finance and sharing knowledge. Even if I stop working part-time, I would likely start volunteering.

 

What are your post-FI plans? How will your life change? What do you look forward to the most?

Since my FIRE view has changed, I think life post FIRE will be very similar to life as it is now. We go out to eat once a week at fun restaurants and, with COVID, have done several local vacations – usually, we make international trips.

The most significant change I foresee is extended domestic and foreign travel. While we could do this now, COVID is a major prohibitor. Additionally, my fiancé plans to stay in her current job for some time, as she loves it. Once this changes, we likely will travel more since she doesn’t have this flexibility at the moment.

 

Have you made any major changes in your lifestyle or investments to accelerate your FI path?

On the contrary, and as notated above, we have decelerated our FIRE path to enjoy more of the present. Slicing my income was terrifying, but it was the best decision we could have made. I found a part-time job by chance, and my day-to-day content has increased dramatically. As a result, our relationship is doing fantastic.

 

Are you facing any unique challenges making FI or RE more difficult?

At present, no, but that could change. I was plagued with costly medical issues the past three years, but after multiple surgeries, I am finally returning to 100%. Hopefully, next year will be the first in many where I don’t reach my maximum out-of-pocket limit for health insurance.

 

What advice do you have for others who are seeking financial independence?

FIRE is an aspirational journey with a vast potential reward, but don’t lose sight of the trip for the end goal. There is little point in living a life where you cannot enjoy the present because of a pursuit that resides in the future. Plus, if you cannot enjoy the now, what makes you think you will be once you reach $X?

Learn how to balance the present and the future, and you will thrive. The whole point of a musical composition is to enjoy the journey, not to reach the final chord, as Alan Watts poetically put it.

 

You previously mentioned you work part-time in the wine industry. Would you elaborate on that?

Sure! I have worked part-time in the wine industry for many years now. My job entails running a direct-to-consumer wine program and doing in-person tasting events – when the pandemic isn’t raging. Since this job is enjoyable and the perks are great, I don’t consider it a job.

I stumbled into this work years ago through a friend of a friend, and the owner and I have developed a familial connection. It has allowed me to travel extensively and created lasting memories.

The one downside to this job is tasting wine at 9 am on occasion; I do not find that enjoyable! [PoF: Have you tried beer at 9am? It’s delightful!]

 

Any parting thoughts on your situation?

I have been very lucky and strategic in life. Nevertheless, I recognize that not everyone has the luxury to up and quit their job on a moment’s notice. When you are dealt a good hand, play it to your advantage and when you aren’t, make sure you keep playing until you get a winner. I have had many ups and downs, and I am grateful every day for where I am at.

 

Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.

Yes, thank you for asking! My biggest question for the hive is frugality: How have you best balanced frugality and pleasure spending in your own lives, and what tips do you have?

Additionally, if any of you have had major surgery before, did you find that you could return 100% to your pre-surgery athletic abilities? I am nearing there, but I am unsure 100% is a reasonable goal.

Thanks for your answers, PoF readers!

 

 

PoF: Catch all the future interviews from those just getting started, at a crossroads, or at the end of their FI journey with a free subscription to Physician on FIRE.

 

 

 

I’ve shared my feedback privately with today’s guest. I wouldn’t want my opinions to influence yours. Please give your take in the space below!

Again, if you’d like to partake in a future Q&A, please download a FIRE Starter, FIRE Crossroads, or Post-FI Notes interview form.